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Retirement plan for 30 years (Income and Expenses accounting)

Retirement plan for over 30 years.

Country: USA  | Accounting type: Income & Expense Accounting  |  Category: Private

Family XX

Retirement plan

Basic Currency: USD

Income & Expense accounting

Accounts
Group Account Description Gr
    ESTATE  
       
  CASH Cash A
  BANK Bank account A
  PORTFOLIO1 Low return portfolio A
  PORTFOLIO2 Mid return portfolio A
  PORTFOLIO3 High return portfolio A
  CAR Cars A
  FURNITURE Home interiors A
  ARTS Arts and other collection A
  HOME Main home A
A   Assets A-L
  LIABILITIES Other liabilities L
  LOAN Current liabilities short term L
  MORTGAGE Liabilities long term L
L   Liabilities A-L
A-L   NET ESTATE  
Categories
Group Category Description Gr
    Income and Expenses  
    INCOME I
  SALARY Salary I
  EXTRAINCOME Extra income I
  SOCIAL Social security income I
  INCOMEPORT Income from portfolio I
I   TOTAL INCOME I-E
       
    EXPENSES E
  FOOD Food purchases E
  HOUSING Expense for house E
  TRANSPORT Transportation expenses E
  HEALTH Health care E
  LEISURE Entertainment E
  INSURANCE Personal insurance E
  GIFT Child and charitable organizations E
  OTHER Other expenses E
  INTEREST Mortgage interest E
E   TOTAL EXPENSES I-E
       
I-E   RESULT  
       
    Cost center  
  .W Withdraw from portfolio CC1
CC1   Total cost center 1  

We show here a complete new approach for creating retirement plans.
We use the advanced budgeting functionalities of Banana Accounting software, to create highly sophisticated accounting projection for 30 or more years.
For each projection year you will know exactly the assets, liabilities, income and expenses.

If you use Excel for calculating retirement planning, it may take you some time to get into this powerful new concept.

Projections file

The projections file is a Banana Accounting file.
Here we use the Income and Expenses accounting method, where transactions amounts are entered as income and expenses.

Table Accounts

The table account is used for:

  • Setting up the accounts. 
    There is an account number (here we use text), the description,the group of the account (column Gr).
    You should add accounts as required by your situation.
  • Entering the opening amounts of each account.
    You should enter yours amounts.
  • Setting up have groups, where account and groups are totalized.
    We have the groups Assets (A), Liabilities (L) and Net Estate (A-L)
  • Showing the calculated amounts.
    We see that will be the Budget of the End of the year.

The table account also give an immediate financial overview.
At any time you can add new accounts (simply add a new line) or change the grouping.
 

Table Categories

The Categories table is used to specify the Income and Expenses categories.

  • You can adapt the categories and grouping to your specific needs.
  • You immediately see the updated amounts of the year budget.
  • We also have setup a cost center to keep track of the withdraw from the Portfolio to the Bank account.

Table Budget

In the Budget table you enter the detailed retirement plan.
This template has only 20 transactions, so that you can modify and save also with the Starter Editsion.
With a licensed version you can insert an unlimited number of budgeting transactions.

Here we have some explanation regarding the budget transactions, for more information see the documentation relative to the budget table.

Here you will enter the transactions to exactly much your situation.

  • Monthly expenses and income.
    • We have choose the 20. of the month, but it may be any day within the months.
    • Repetition is "M" for month.
    • Income and expenses amounts.
      We have entered amounts based on typical American retirement disbursement.
    • Account.
      Is the account where the money come from or goes to.
    • Categories.
      Is the expense or income or the contra account when moving money from two accounts.
    • Total is the projection for the accounting period.
      In this example is the amount multiplied by 12 months.
    • CC1
      Is the cost center column.
  • Year end expenses.
    • Repeat is *Y".
    • Formula to let Banana software automatically calculate.

Formula transactions

Formulas are written in Javasctipt 5 language using the Banana Accounting API.
Formulas are quite powerful, but require some knowledge to use it.

Interest calculation on the mortgage

We let the software calculate the exact interest and the amount is payed with the BANK and is recorded as "INTEREST"

-budgetInterest("MORTGAGE", -3.0,"YC")
  • budgetInterest calculate the interest (365/365) based on the period balance. 
    It takes following parameters
    • Account "MORTGAGE"
    • Interest rate 3%
      Minus sign means calculate interest on the credit balance.
    • Period
      "YC" Year current. In this case from beginning of the year up to the end of the year.
  • "-" sign at the beginning.
    We invert the amount, so it goes in the Expense columns

Revenue from your portfolio

End of year you we register the amount earned from the portfolio.

budgetBalance("PORTFOLIO1")*0.03
  • budgetBalance formula
    takes balance of the account.
  • multiply by "0.03" or 3%.

Withdraw form portfolio

End of year we move the amount from PORTFOLIO1 account to the BANK

withdraw("PORTFOLIO1",  6000)
  • "withdraw" is a Used defined function that takes as parameters
    • Account
    • Amount (without)

The "withdraw" function is defined in the Documents table within the "_budget.js" document.
It return the amount to withdraw only if the balance is positive and up to the maximum amount of the balance.

Banana Projections calculation

Based on the entered transactions Banana does all necessary to project the amount for the period requested.

Reports

Here are the report you can have

Account card Bank

Like in normal accounting, here you can have the account relative to the budget transactions.

Account card Portfolio1

Here you see the evolution of the Portfolio 1 account.

  • Each year you have transactions for income and a withdraw.
  • The progressive Balance get lower.

1. Year

Menu Account1->Enhanced statements with groups->Plan 1 year

  • Balance sheet at the end of the year
  • Income and expenses of the first year

5 Years Estate projection (Balance sheet)

In the following image, you see the balance sheet projected over the 5 years period, with subdivisions for 1 years.

  • The portfolio account getting reduced each year.
  • The mortgage being reduced over the years.
  • We have not yet entered any transactions for the Furniture, Arts, Car and Home, the amount remains the same.

5 Years Income and Expenses

Here we show a projection of the Income and Expenses over the 5 years period, with subdivision for each year.

  • Income is smaller each year because there is a withdraw from the portfolio that make the revenue smaller.
  • Also the mortgage interest is smaller, due the amortization of the loan.

5 Years Withdraws

With the cost center, we keep track of the amount taken from Portfolio and put on the bank.
We consume the capital.

 

30 Years Estate projection

In the following image, you see the balance sheet projected over the 30 years period, with subdivisions for 5 years.

  • You see the bank account going negative
  • The portfolio account getting depleted after a number of years.
  • The mortgage being reduced over the years.
  • We have not yet entered any transactions for the Furniture, Arts, Car and Home, the amount remains the same.

30 Years Income and Expenses

 

30 Years Withdraws

 

 


Free and with no obligation

You can open this template with the Banana Accounting software. If you still don't have Banana Accounting you can download the Free Version. Banana Accounting offers several applications and more than 500 templates to choose from.

 

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